Company Law Board
Coimbatore Lakshmi Investment And ... vs Members Of Public Holding Deposits In ... on 29 August, 2006
Equivalent citations: [2007]74SCL337(CLB)
ORDER
K.K. Balu, Vice-Chairman
1. According to Shri Krishna Srinivasan, learned Counsel, M/s. Coimbatore Lakshmi Investment and Finance ("the Company") has repaid the entire amount to the depositors pursuant to a scheme sanctioned on 31-3-1999 by the Company Law Board under Section 45QA of the Reserve Bank of India Act, 1934 ('the Act'). After payment of the entire amount, a sum of Rs. 13,95,560 (now reduced to Rs. 13,84,394) pertaining to 163 depositors (now 161 depositors) is lying with the Company as 'unclaimed'. The Company has taken earnest steps to send the payment warrants to the last known addresses of the unpaid depositors, but no one came forward claiming the matured deposits. These deposits relate to the year 1997-98 and seven years have expired from their due dates. By virtue of Section 205C of the Companies Act, 1956, the Company has to transfer such amounts to a fund constituted under this section within a period of seven years from the date of maturity. However, the present scheme has been framed under Section 45QA of the Act, which falls under Chapter III-B of the Act. The provisions of this Chapter override other laws, including the Companies Act which are inconsistent. Consequently, the provisions of Section 45QA of the Act overrides Section 205C of the Companies Act and the Company will deposit the unclaimed deposit amount with an interest bearing account of any nationalised bank and return the deposit amount as and when the claims are received from such depositors. The Company will not withdraw any amount from the amount to be deposited for any other purposes apart from repayment to the subject depositors. Shri Krishna Srinivasan, Learned Counsel urged for appropriate orders on the prayer of the Company.
2. I have considered the matter in entirety. Section 205C contemplates that matured deposits remaining unpaid or unclaimed, with the companies for a period of seven years from the date they become due for payment, must be transferred to a fund called "Investor' Education and Protection Fund" ("the Fund") established by the Central Government. The Reserve Bank of India has reported that Section 205C, not being inconsistent with any provisions of the RBI Act, Section 45QA of the Act does not apply and, hence, Section 205C of the Companies Act, 1956 will be applicable to Non-Banking Financial Companies also. Section 205C is mandatory and the Company is bound to transfer the unclaimed matured deposits to the Fund within a period of seven years from their due dates. All unclaimed deposits were reportedly matured, in terms of the relevant deposit receipts, during the year 1997-98. However, the due dates of all deposits of the Company, by virtue of the scheme sanctioned on 31-3-1999, got extended in the following mariner:
(a) The Company shall pay interest at the contracted rate up to the date of maturity till payment at 12.50 per cent per annum. In the event of failure by the company to make repayment as per the Scheme approved by the CLB, overdue interest shall be payable at 14.5 per cent per annum.
(b) All deposits up to Rs. 5,000 together with interest from the date of deposit till date of payment shall be paid in one instalment within a period of four months from the date of maturity or date of the order of the CLB whichever is later.
(c) All deposits of Rs. 5,001-10,000 together with interest from the date of deposit till date of payment shall be paid within 18 months from the date of maturity or date of the order of the CLB whichever is later at 50 per cent of the principal amount during the first year and balance of 50 per cent of the principal amount together with the entire interest due thereon in the second year.
(d) All deposits of Rs. 10,001-15,000 together with interest from the date of deposit till date of payment shall be paid within 21 months from the date of maturity or date of the order of the CLB whichever is later" at 50 percent of the principal amount during the first year; and balance 50 per cent of the principal amount together with the entire interest due thereon in the second year.
(e) All deposits of Rs. 15,001-25,000 together with interest from the date of deposit till date of payment shall be paid within 24 months from the date of maturity or date of the order of the CLB whichever is later at 50 per cent of the principal amount during the first year and balance 50 per cent of the principal amount together with the entire interest due thereon in the second year.
(f) All deposits above Rs. 25,000 together with interest from the date of deposit till date of payment shall be paid within 27 months from the date of maturity or elate of the order of the CLB whichever is later at 35 per cent of the principal amount during the first year; 35 per cent of the principal amount in the 2nd year; and balance of 30 per cent of the principal amount together with the entire interest due thereon in !he third year.
(g) Notwithstanding the above-
(i) All deposits up to Rs. 5,000 maturing during the year 2000 shall be paid together with interest thereon in one instalment within three months from the date of maturity of sueh deposits;
(ii) All deposits of Rs. 5,001 - 10,000 maturing during the year 2000 shall be paid together with interest thereon in one instalment within six months from the date of maturity of such deposits.
(iii) All deposits of Rs. 10,001 - 15,000 maturing during the year 2000 shall be paid together with interest thereon in one instalment within nine months from the date of maturity of such deposits.
(iv) All deposits of Rs. 15,001 - 25,000 maturing during the year 2000 shall be paid with interest thereon in two equal instalments within 12 months from the date of maturity of such deposits.
(v) All deposits above Rs. 25,000 maturing during the year 2000 shall be paid with interest thereon in two equal instalments within 15 months from the date of maturity of such deposits.
(vi) All deposits maturity during the year 2001 shall be paid together with interest on maturity in terms of such deposits.
The company shall, for the purpose of Section 205C, go by the Scheme sanctioned on 31-3-1999, to determine the due dates of deposits for payment by it. In view of the foregoing conclusions, the company will transfer the entire unclaimed matured deposits to the Fund within a period of seven years from the due dates of such deposits, as per the scheme dated 31-3-1999. With these directions, the application stands disposed of.